Tata Motors suffer heavy loss; figure comes in single digit after 16 yrs

The share price of both Tata Motors and Tata Motors DVR dropped more than 9 per cent. The company declared subdued financial performance in Q3FY17 owing to diminishing profitability margins of Jaguar Land Rover (JLR).

Tata Motors contributed 78 points loss to the BSE Sensex in an intraday basis. We can say that, the declining share price of the company is dragging markets on Wednesday. After the declaration of results, the share price of Tata Motors dropped more than 15 per cent in the last couple of trading sessions.

Tata Motors consolidated operating margin decreased about 500 basis points to 7.6 per cent on yearly basis because JLR’s upward margin trajectory was punctured. It contracted from 14.4 per cent to 9.3 per cent, which is the first time to single digits since fiscal year 2010.

Most of the investment banks have cut the target for Tata Motors. JLR is the cash cow of Tata Motors, which is continuing to add sales volumes. Going forward, we need to watch out whether the growth will be at the cost of margins.